UNP vs CAT

For growth investors, Caterpillar Inc.

(CAT) is the stronger pick with 4. 3% revenue growth year-over-year, versus 1. 1% for Union Pacific Corporation (UNP). Union Pacific Corporation (UNP) offers the better valuation at 22. 4x trailing P/E (21. 3x forward), making it the more compelling value choice. Analysts rate Union Pacific Corporation (UNP) a "Buy" — based on 47 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, Union Pacific Corporation (UNP) is the cheapest at 22.

4x versus Caterpillar Inc. at 49. 2x. On forward P/E, Union Pacific Corporation is actually cheaper at 21. 3x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Caterpillar Inc. wins at 1. 43x versus Union Pacific Corporation's 2. 45x — a reasonable growth-adjusted valuation.

Over the past 5 years, Caterpillar Inc.

(CAT) delivered a total return of +301. 9%, compared to +29. 4% for Union Pacific Corporation (UNP). Over 10 years, the gap is even starker: CAT returned +1223% versus UNP's +261. 3%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Union Pacific Corporation (UNP) is the lower-risk stock at 0.

64β versus Caterpillar Inc. 's 1. 54β — meaning CAT is approximately 141% more volatile than UNP relative to the S&P 500. On balance sheet safety, Union Pacific Corporation (UNP) carries a lower debt/equity ratio of 172% versus 2% for Caterpillar Inc. — giving it more financial flexibility in a downturn.

By revenue growth (latest reported year), Caterpillar Inc.

(CAT) is pulling ahead at 4. 3% versus 1. 1% for Union Pacific Corporation (UNP). On earnings-per-share growth, the picture is similar: Union Pacific Corporation grew EPS 7. 9% year-over-year, compared to -14. 6% for Caterpillar Inc.. Over a 3-year CAGR, CAT leads at 4. 4% annualised revenue growth. Higher growth typically commands a higher valuation multiple — check whether the premium P/E or P/S is justified by the growth rate using the PEG ratio.

Union Pacific Corporation (UNP) is the more profitable company, earning 29.

1% net margin versus 13. 1% for Caterpillar Inc. — meaning it keeps 29. 1% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: UNP leads at 40. 1% versus 16. 6% for CAT. At the gross margin level — before operating expenses — UNP leads at 59. 4%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential.

By this metric, Caterpillar Inc. (CAT) is the more undervalued stock at a PEG of 1. 43x versus Union Pacific Corporation's 2. 45x. A PEG below 1. 5 suggests fair-to-attractive pricing relative to expected growth. On forward earnings alone, Union Pacific Corporation (UNP) trades at 21. 3x forward P/E versus 40. 1x for Caterpillar Inc. — 18. 8x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for UNP: 7. 1% to $287. 30.

All stocks in this comparison pay dividends.

Union Pacific Corporation (UNP) offers the highest yield at 2. 0%, versus 0. 6% for Caterpillar Inc. (CAT).

For long-horizon retirement investors, Union Pacific Corporation (UNP) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0.

64), 2. 0% yield, +261. 3% 10Y return). Caterpillar Inc. (CAT) carries a higher beta of 1. 54 — meaning larger drawdowns in market downturns, which matters significantly when you cannot wait years for a recovery. Both have compounded well over 10 years (UNP: +261. 3%, CAT: +1223%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Industrials sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both.

These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.